A senior executive of an old private bank who had spent many years in a large state-owned bank’s treasury was all smiles last week, narrating to me what happened in the bond market on 3 April. “The foreign banks were begging for securities..
It is no secret that Indian banks’ treasury income, which contributed handsomely to their profit in calendar year 2016 as bond prices rose and yields fell, has been substantially eroded since January. The yield on the benchmark 10-year paper rose 29 basis points during the last quarter of fiscal year 2017, from 6.4% on 1 January to 6.
The Banks Board Bureau has recommended five executive directors of public sector banks for top posts in state-run banks which will fall vacant in coming months. They are Sunil Mehta of Corporation Bank, Dina Bandhu Mohapatra of Canara Bank, Rajkiran Rai of Oriental Bank of Commerce, R.A.
Since Urjit Patel took over as the governor of India’s central bank in September 2016, he has presented four monetary policy reviews, including the latest one on 6 April. Undoubtedly, this is the smartest one. The backdrop of the policy was abundance of liquidity making a mockery of the Reserve Bank of India’s (RBI) benchmark repo rate, or the rate at which the central bank lends money to the commercial banks, as the overnight rates as well as all short-term instruments were trading at lower than the repo rate.
Absurdist playwrights would turn in their graves looking at what’s happening in the Indian financial system. A historic low growth in bank credit is accompanying an unprecedented surge in liquidity. In February, the Reserve Bank of India (RBI) in its sixth bimonthly monetary policy shifted the stance of the policy from accommodative to neutral and left the repo rate, or the rate at which the Indian central bank lends money to the commercial banks, unchanged at 6.